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Budget Deal May Be Turkey This Thanksgiving

I predicted two things in the Sept. 6 Fiscal Fitness — the first published after the Budget Control Act was signed into law this past Aug. 2 — that are coming true faster than I, even on my most cynical days, would have dared to forecast.

I say this not to be smug (although it’s hard not to feel just a little satisfaction for correctly reading the tea leaves) but rather with great sadness.

First, I predicted that the across-the-board spending cuts “that are supposed to happen in January 2013 if the Joint Committee on Deficit Reduction can’t agree on anything or if what it proposes isn’t enacted have to be considered especially vulnerable to changes.”

This unwinding is beginning to take on a great deal of momentum. As the long-expected deadlock in the anything-but-super committee actually comes ever-closer to being realized, serious efforts are under way to prevent the across-the-board spending cuts from being triggered and to make sure the Pentagon isn’t included if they happen.

Second, I said “like all the budget deals that have come before it, this one is already on the skids even if it’s not immediately obvious.” A separate analysis I wrote at that same time predicted that this agreement might not last until Christmas.

That now seems to have been overly optimistic. Given all of the legislative scurrying over the past few days, a major weakening of the deal by Thanksgiving now has to be considered a real possibility.

I have very mixed feelings about one of the proposed changes — the plan to give the committee several additional months to come up with a $1.2 trillion to $1.5 trillion deficit reduction plan of its own that will prevent the sequester from occurring.

On the one hand: Why not give it more time, what do we have to lose, let them continue to take a shot if it will help, etc.

Assuming that the deficit reductions will begin to happen when they will be the correct fiscal policy — that is, when the private sector is creating economic activity and jobs and the federal government can pull back without creating problems — it makes sense to allow the committee more time to negotiate and to keep in place the legislative protections for whatever it comes up with.

Indeed, maintaining the super committee process, which guarantees an up-or-down vote and prevents amendments to the recommended plan, might be the only way a proposal can get through the legislative gauntlet that exists on Capitol Hill these days for anything having to do with the budget.

On the other hand, not only is there no reason to think the super committee will be any more successful in 2012 than it has been in 2011, there’s every reason to believe it will be even harder for it to come up with a deficit reduction agreement next winter or spring when the election is only months away.

In addition, in the wake of the failure of every other deficit reduction effort during the past year (Bowles-Simpson, the “gang of six,” the Vice President Joseph Biden-led negotiations, the Obama-Boehner summit, the defeat in the Senate of the effort to create a Congressional commission), no one should pretend that the issues and sticking points for any other ad hoc committee, task force or Congressional or presidential commission will be any more successful next year than they are now.

Therefore, it might be better to let the super committee go into oblivion as scheduled, for the across-the-board cuts to be triggered and for Congress and the White House to lose as much sleep as possible about the sequester as Jan. 2, 2013, gets closer.

That might be the only way they feel any real pressure to come up with an alternative plan — enact something different or the domestic and military programs suffer the consequences.

I have no similarly mixed feelings about changing the law so that military spending isn’t affected if there’s an across-the-board cut. It absolutely should continue to be included.

The fact that the threat of the Pentagon sequester was considered to be one of the major motivations for Congress and the White House to agree to a deficit reduction plan is the primary reason the reductions in military programs must continue to be a real possibility.

The increasingly shrill complaints over the past few weeks from the Pentagon and the contractors who would be most affected by the changes make it easy to see how removing this spending from the across-the-board equation will seriously reduce the pressure on lawmakers to do anything on the deficit.

In addition, it’s not at all clear that, if they occurred, the reductions would do anything more than force the efficiencies at the Pentagon that many military experts have long said are overdue.

But no matter what the changes might be, it seems increasingly clear that this budget deal could well set the record as the one that stays in place for the shortest period of time and that it could be carved up in many ways this Thanksgiving.

Stan Collender is a partner at Qorvis Communications and founder of the blog Capital Gains and Games. He is also the author of “The Guide to the Federal Budget.”

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